Subsidy Removal For 25kg-bag Wheat Flour

It was announced today that the subsidy for the 25kg-bag of wheat flour will be cancelled, effective today.

The cancellation of this subsidy will likely result in higher cost of business and as a result price hikes in food items such as roti canai, noodles and other food that use general purpose flour.

Millers were informed of the subsidy removal at a meeting with the Domestic Trade, Cooperatives and Consumerism Ministry last week, while a circular was distributed among wholesalers on the revised prices for the 25-kg bag of flour for Peninsula Malaysia.

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The Blue Key brand flour is now priced at RM42, a 25% increased from its subsidised price of RM33.75.

A flour miller, who was identified as Ng, told The Star that he was among the industry representatives present at the February 24 meeting which was attended by a ministry senior official.

“The 25kg-bag of flour, which is purchased by retailers such as coffee shops and mamak restaurants, will increase from RM33.75 to RM42,” Ng said.

However, subsidy will remain for the 1kg-bag of wheat flour for households, including brands like Blue Key and Bunga Cempaka. The subsidised price will stay at RM1.35.

Ng also said that millers used to get subsidies of between RM600 and RM800 per metric tonne of flour produced each month or 60 sen to 80 sen per kilo depending on the price of wheat in the market.

The market price of flour had been distorted by the subsidies as the cost of milling wheat into flour could cost more than RM33.75 per kilo. The price for the production of flour varies, based on wheat price which is now RM968 (US$230) per tonne.

“We welcome the Government’s decision,” Ng added.

According to another flour importer, prices of food items like roti canai and local kuih will likely be affected as these items are made with normal or general purpose flour. However, items such as bread, biscuits and cakes, will probably not be affected as they are made using premium flour which was never subsidised.

Your breakfast may just be more expensive now

With the removal of sugar subsidy in 2013, we have seen price hikes with a lot of food items. Top with the removal of wheat flour subsidy, we can definitely expect a higher bill when we next dine out.

Here are some of Malaysians’ favourite food item that will likely see a price increase: